UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 6-K

  

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August, 2012.

 

Comission File Number 001-32535

 

Bancolombia S.A.

(Translation of registrant’s name into English)

 

Cra. 48 # 26-85
Medellín, Colombia
(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ                    Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): £

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(2): £

 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o                    No þ

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                    .

 

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BANCOLOMBIA S.A.
  (Registrant)
   
Date:  August 1, 2012  By:   /s/ JAIME ALBERTO VELÁSQUEZ B.  
    Name:   Jaime Alberto Velásquez B.  
    Title:   Vice President of Strategy and Finance  

 

 
 

 

  2Q12

 

BANCOLOMBIA S.A. (NYSE: CIB; BVC: BCOLOMBIA, PFBCOLOM) REPORTS CONSOLIDATED NET INCOME OF COP 354 BILLION FOR THE SECOND QUARTER OF 2012 (COP 416 PER SHARE - USD 0.93 PER ADR), WHICH REPRESENTS A DECREASE OF 8% COMPARED TO THE SAME QUARTER LAST YEAR.

 

·Net interest income increased 19% compared to 2Q11 and 3% compared to 1Q12. These increases are the result of loan growth coupled with an expansion of the net interest margin, which ended the period at 6.2%.
·Net loans increased 17% compared to 2Q11. This variation confirms the sustained loan demand in Colombia, although it already reflects some moderation in growth due to more stringent standards for granting loans.
·Past due loans as a percentage of total loans continues being low. 30 days (or more) past due loans as a percentage of total gross loans was 3.0%. Loan deterioration during 2Q12 was COP 383 billion, and net provision charges for past due loans and foreclosed assets totaled COP 310 billion, which represents 2.0% of gross loans when annualized.
·The balance sheet remains strong. Loan loss reserves represented 4.9% of total gross loans and 163% of past due loans at the end of 2Q12. The capital adequacy ratio ended the quarter at 14.9% (Tier 1 of 11.6%).

 

August 1, 2012. Medellín, Colombia – Today, BANCOLOMBIA S.A. (“Bancolombia” or “the Bank”) announced its earnings results for the second quarter of 2012.

 

For the quarter ended on June 30, 2012 (“2Q12”), Bancolombia reported consolidated net income of COP 354 billion, or COP 416 per share - USD 0.93 per ADR, which represents a decrease of 8% as compared to the results for the quarter ended on June 30, 2011 (“2Q11”) and a decrease of 20% as compared to the results for the quarter ended on March 31, 2012 (“1Q12”).

 

Bancolombia ended 2Q12 with COP 87,215 billion in assets, 4% higher than those at the end of 1Q12 and 16% greater than at the end of 2Q11. At the same time, liabilities totaled COP 76,499 billion, increasing 4% as compared to the figure presented in 1Q12 and increased 14% as compared to 2Q111.

 

1 This report corresponds to the consolidated financial statements of BANCOLOMBIA S.A. (“BANCOLOMBIA”) and its affiliates of which it owns, directly or indirectly more than 50% of the voting capital stock. These financial statements have been prepared in accordance with generally accepted accounting principles in Colombia and the regulations of Superintendencia Financiera de Colombia, collectively COL GAAP. BANCOLOMBIA maintains accounting records in Colombian pesos, referred to herein as “Ps.” or “COP”. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. There have been no changes to the Bank's principal accounting policies in the quarter ended March 31, 2012. The statements of income for the quarter ended June 30, 2012 are not necessarily indicative of the results for any other future interim period. For more information, please refer to the Bank's filings with the Securities and Exchange Commission, which are available on the Commission's website at www.sec.gov.

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All forward-looking statements, whether made in this release or in future filings or press releases or orally, address matters that involve risks and uncertainties; consequently, there are or will be factors, including, among others, changes in general economic and business conditions, changes in currency exchange rates and interest rates, introduction of competing products by other companies, lack of acceptances of new products or services by our targeted customers, changes in business strategy and various others factors, that could cause actual results to differ materially from those indicated in such statements. We do not intend, and do not assume any obligation, to update these forward-looking statements. Certain monetary amounts, percentages and other figures included in this report have been subject to rounding adjustments. Any reference to BANCOLOMBIA means the Bank together with its affiliates, unless otherwise specified.

Representative Market Rate July 1, 2012 $1,784.07 = US$ 1

 

1
 

 

  2Q12

 

BANCOLOMBIA: Summary of consolidated financial quarterly results2

 

CONSOLIDATED BALANCE SHEET            
AND INCOME STATEMENT  Quarter   Growth 
(COP millions)  2Q11   1Q12   2Q12   2Q12/1Q12   2Q12/2Q11 
ASSETS                         
Loans and financial leases, net   50,709,728    57,896,430    59,212,566    2.27%   16.77%
Investment securities, net   10,231,243    8,672,604    10,468,940    20.71%   2.32%
Other assets   14,215,941    17,667,740    17,533,567    -0.76%   23.34%
Total assets   75,156,912    84,236,774    87,215,073    3.54%   16.04%
                          
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Deposits   46,237,745    51,967,757    54,475,937    4.83%   17.82%
Non-interest bearing   6,972,139    7,653,768    7,545,059    -1.42%   8.22%
Interest bearing   39,265,606    44,313,989    46,930,878    5.91%   19.52%
Other liabilities   20,911,566    21,837,349    22,022,593    0.85%   5.31%
Total liabilities   67,149,311    73,805,106    76,498,530    3.65%   13.92%
Shareholders' equity   8,007,601    10,431,668    10,716,543    2.73%   33.83%
Total liabilities and shareholders' equity   75,156,912    84,236,774    87,215,073    3.54%   16.04%
                          
Interest income   1,448,120    1,785,336    1,863,237    4.36%   28.67%
Interest expense   464,471    653,527    696,772    6.62%   50.01%
Net interest income   983,649    1,131,809    1,166,465    3.06%   18.59%
Net provisions   (103,940)   (198,155)   (310,221)   56.55%   198.46%
Fees and income from service, net   407,298    422,964    440,498    4.15%   8.15%
Other operating income   121,321    198,547    189,714    -4.45%   56.37%
Total operating expense   (888,740)   (962,527)   (1,025,213)   6.51%   15.36%
Goodwill amortization   (11,747)   (11,819)   (11,218)   -5.09%   -4.50%
Non-operating income, net   9,394    13,393    18,349    37.00%   95.33%
Income tax expense   (131,708)   (148,642)   (113,876)   -23.39%   -13.54%
Net income   385,527    445,570    354,498    -20.44%   -8.05%

 

PRINCIPAL RATIOS  Quarter   As of 
   2Q11   1Q12   2Q12   Jun-11   Jun-12 
PROFITABILITY                         
Net interest margin (1)   6.16%   6.16%   6.25%   6.03%   6.19%
Return on average total assets (2)   2.11%   2.12%   1.65%   2.06%   1.88%
Return on average shareholders´ equity (3)   19.64%   18.14%   13.40%   18.54%   15.73%
EFFICIENCY                         
Operating expenses to net operating income   59.55%   55.57%   57.69%   60.51%   56.64%
Operating expenses to average total assets   4.94%   4.64%   4.83%   4.93%   4.73%
CAPITAL ADEQUACY                         
Shareholders' equity to total assets   10.65%   12.38%   12.29%          
Technical capital to risk weighted assets   13.69%   15.52%   14.89%          
KEY FINANCIAL HIGHLIGHTS                         
Net income per ADS (USD)   1.10    1.17    0.93           
Net income per share $COP   489.35    523.08    416.16           
P/BV ADS (4)   2.91    2.37    2.19           
P/BV Local (5) (6)   2.86    2.29    2.14           
P/E (7)   14.94    13.60    16.35           
ADR price (8)   66.73    64.66    61.84           
Common share price (8)   29,060    28,100    26,980           
Shares outstanding (9)   787,827,003    851,827,000    851,827,000           
USD exchange rate (quarter end)   1,772.32    1,792.07    1,784.60           

 

(1) Defined as net interest income divided by monthly average interest-earning assets. (2) Net income divided by monthly average assets. (3) Net income divided by monthly average shareholders' equity. (4) Defined as ADS price divided by ADS book value. (5) Defined as share price divided by share book value. (6) Share prices on the Colombian Stock Exchange; (7) Defined as market capitalization divided by annualized quarter results. (8) Prices at the end of the respective quarter. (9) Common and preferred. 

 

2
 

 

  2Q12

 

1.BALANCE SHEET

 

1.1.Assets

 

As of June 30, 2012, Bancolombia’s assets totaled COP 87,215 billion, which represents an increase of 3.5% compared to 1Q12 and an increase of 16.0% compared to 2Q12.

 

The increase in assets presented for the quarter is mainly explained by the 2.3% increase in net loans and financial leases, which represented 68% of total assets at the end of 2Q12. Similarly, investments increased 20.7% during the quarter due to the increase of the trading securities portfolio.

 

It is highlighted the growth of operating leases, which increased 14% during the quarter and 58% compared to 2Q12.

 

1.2.Loan Portfolio

 

The following table shows the composition of Bancololombia’s investments and loans by type and currency:

 

(COP Million)  Amounts in COP   Amounts in USD converted to COP   Amounts in USD (thousands)   Total 
(1 USD = 1784,60 COP)       2Q12/1Q12   2Q12/2Q11       2Q12/1Q12   2Q12/2Q11       2Q12/1Q12   2Q12/2Q11       2Q12/1Q12   2Q12/2Q11 
Net investment securities   7,561,312    10.62%   2.52%   2,907,628    58.28%   1.81%   1,629,288    58.94%   1.11%   10,468,940    20.71%   2.32%
Gross Loans   48,174,396    4.22%   21.61%   14,075,077    -3.30%   3.22%   7,886,965    -2.89%   2.51%   62,249,473    2.42%   16.90%
Commercial loans   26,670,087    3.90%   17.32%   10,634,188    -4.99%   1.91%   5,958,864    -4.60%   1.21%   37,304,275    1.20%   12.47%
Consumer loans   9,862,919    5.41%   31.30%   1,966,284    3.20%   6.62%   1,101,807    3.63%   5.89%   11,829,203    5.04%   26.43%
Small  business loans   287,931    1.82%   11.02%   33,451    -3.57%   334.32%   18,744    -3.16%   331.33%   321,382    1.23%   20.34%
Mortgage loans   4,326,970    2.68%   27.48%   745,401    -0.44%   -0.52%   417,685    -0.02%   -1.21%   5,072,371    2.21%   22.41%
Finance lease   7,026,489    4.86%   22.93%   695,753    3.35%   16.06%   389,865    3.79%   15.26%   7,722,242    4.73%   22.28%
Allowance for loan losses   (2,679,794)   6.53%   22.64%   (357,113)   -2.05%   0.90%   (200,108)   -1.64%   0.20%   (3,036,907)   5.44%   19.61%
Net total loans and fin. leases   45,494,602    4.09%   21.55%   13,717,964    -3.33%   3.29%   7,686,856    -2.92%   2.57%   59,212,566    2.27%   16.77%
Operating leases, net   1,677,498    15.12%   63.73%   93,865    -1.22%   -1.06%   52,597    -0.80%   -1.74%   1,771,363    14.12%   58.24%
Total assets   70,957,856    8.96%   16.75%   16,257,217    -14.94%   13.06%   9,109,726    -14.58%   12.28%   87,215,073    3.54%   16.04%
Total deposits   42,849,488    4.28%   19.89%   11,626,449    6.88%   10.77%   6,514,877    7.33%   10.00%   54,475,937    4.83%   17.82%
Total liabilities   61,062,728    10.15%   14.15%   15,435,802    -15.96%   13.04%   8,649,446    -15.61%   12.27%   76,498,530    3.65%   13.92%

 

The most relevant aspects regarding the evolution of the loan portfolio during 2Q12 were:

 

·          The dynamic growth of consumer loans in Colombia during 2Q12 and compared to 2Q11.

 

·          The demand for USD denominated commercial loans has slowed down during the last 12 months and decreased in 2Q12. This trend is impacted by the reduced need for investment capital by companies.

 

·          Net loans in USD correspond to loans originated in Colombia (USD 3,326 million, 43%), El Salvador (USD 2,412 million, 31%) and other countries (USD 1,949 million, 26%).

 

·          COP appreciated 0.4% versus USD during 2Q12 and 0.7% for the last 12 months.

 

·          Mortgage loans denominated in COP presented a dynamic performance. The dynamism of mortgage lending in Colombia is explained by the optimism regarding the economy, lower long-term interest rates, as well as by the Colombian government’s interest rate subsidy programs. On the other hand, the outstanding mortgage balance denominated in USD from our operation in El Salvador remained stable during 2Q12, and decreased 1.2% in the past 12 months.

 

·          Financial leases, 91% of which are denominated in COP, increased 4.7% during the quarter and 22% as compared to 2Q11. Operating leases, net of depreciation, increased 14% during the quarter and 58% with respect to 2Q11. These two products are mainly used by small and medium enterprises in order to finance equipment, commercial real estate and commercial vehicles.

 

3
 

 

  2Q12

 

When analyzing the loan portfolio according to the customer categories established by Bancolombia in order to manage its commercial strategy, it becomes clear that consumer and SMEs loans were key drivers of the growth during 2Q12 as it increased 5.2% with respect to 1Q12. This increase is explained by higher demand for working capital by SMEs, personal loans and vehicle loans. Corporate loans decreased 0.1% compared to 1Q12, due to lower demand of corporate loans.

 

Total reserves (allowances in balance sheet) for loan losses increased 5% during 2Q12 and totaled COP 3,037 billion, or 4.9% of total loans at the end of the quarter. For further explanation regarding coverage of the loan portfolio and credit quality trends, see section “2.4. Asset Quality, Provision Charges and Balance Sheet Strength”.

 

The following table summarizes Bancolombia’s total loan portfolio:

 

LOAN PORTFOLIO      As of       Growth   % of Total   % of 
(COP million)  Jun-11   Mar-12   Jun-12   2Q12/1Q12   2Q12/2Q11   loans   Category 
CORPORATE                                   
Working capital loans   22,973,517    25,053,335    24,988,703    -0.26%   8.77%   40.14%   85.43%
Funded by domestic development banks   256,657    240,287    217,342    -9.55%   -15.32%   0.35%   0.74%
Trade Financing   3,382,659    3,762,238    3,860,591    2.61%   14.13%   6.20%   13.20%
Overdrafts   93,779    129,876    135,921    4.66%   44.94%   0.22%   0.46%
Credit Cards   42,084    48,046    46,556    -3.10%   10.63%   0.07%   0.16%
TOTAL CORPORATE   26,748,696    29,233,782    29,249,113    0.05%   9.35%   46.99%   100.00%
RETAIL AND SMEs                                   
Working capital loans   5,471,297    6,870,855    7,234,422    5.29%   32.22%   11.62%   35.80%
Personal loans   5,024,114    6,123,115    6,470,386    5.67%   28.79%   10.39%   32.02%
Loans funded by   domestic development banks   626,738    704,423    759,471    7.81%   21.18%   1.22%   3.76%
Credit Cards   2,962,531    3,440,670    3,539,529    2.87%   19.48%   5.69%   17.52%
Overdrafts   256,508    271,247    291,629    7.51%   13.69%   0.47%   1.44%
Automobile loans   1,653,102    1,719,882    1,817,377    5.67%   9.94%   2.92%   8.99%
Trade Financing   46,981    76,204    92,933    21.95%   97.81%   0.15%   0.46%
TOTAL RETAIL AND SMEs   16,041,271    19,206,396    20,205,747    5.20%   25.96%   32.46%   100.00%
MORTGAGE   4,143,652    4,962,698    5,072,371    2.21%   22.41%   8.15%   100.00%
FINANCIAL LEASES   6,315,210    7,373,733    7,722,242    4.73%   22.28%   12.41%   100.00%
Total loans and financial leases   53,248,829    60,776,609    62,249,473    2.42%   16.90%   100.00%   100.00%
Allowance for loan losses   (2,539,101)   (2,880,179)   (3,036,907)   5.44%   19.61%          
Total loans and financial leases, net   50,709,728    57,896,430    59,212,566    2.27%   16.77%          

 

1.3.Investment Portfolio

 

As of June 30, 2012, Bancolombia’s net investment portfolio totaled COP 10,469 billion, increasing 20.7% compared to 1Q12 and 2.3% compared to 2Q11. The investment portfolio is mainly composed of debt investment securities, which represented 89% of Bancolombia’s total investments and 11% of assets at the end of 2Q12. Investments denominated in USD totaled USD 1,629 million and represented 28% of the investment portfolio. Additionally, the Bank has COP 1,729 billion in net mortgage backed securities, which represents 16% of the investment portfolio. The duration of the debt securities portfolio was 35.7 months with a yield to maturity of 4.6% at the end of 2Q12.

 

4
 

 

  2Q12

 

1.4.Goodwill

 

As of 2Q12, Bancolombia’s goodwill totaled COP 602 billion and decreased 2.2% compared to the amount reported in 1Q12 and decreasing 10.4% compared to 2Q11. This variation is explained by the amortization of goodwill reported during the past year (under COL GAAP, goodwill is amortized within a period of 20 years) and by the appreciation of the Colombian peso versus the dollar. As of June 30, 2012, Bancolombia’s goodwill included USD 331 million related mostly to the acquisition of Banagrícola in 2007.

 

1.5.Funding

 

As of June 30, 2012, Bancolombia’s liabilities totaled COP 76.499 billion, increasing 3.6% compared to 1Q12 and 13.9% compared to 2Q11. The ratio of net loans to deposits (including borrowings from domestic development banks) was 103% at the end of 2Q12, decreasing compared to the 105% reported in 1Q12, and also decreasing compared to the 104% in 2Q11.

 

Deposits totaled COP 54,476 billion (or 71% of liabilities) at the end of 2Q12, increasing 4.8% during the quarter and 17.8% over the last 12 months. CDs represented 39.8% of deposits in 2Q12. Bancolombia´s funding strategy has meant to take advantage from higher liquidity, encouraging deposits into savings and checking accounts, which have a lower cost. However, the increase in the cost of deposits reflects the rate increases performed by the Colombian Central Bank The ultimate goal is to defend the net interest margin.

 

DEPOSIT MIX   2Q11     1Q12     2Q12  
COP Million        %         %         % 
Checking accounts   9,242,949    19.99%   9,293,698    17.88%   9,139,238    16.78%
Saving accounts   19,484,245    42.14%   22,538,485    43.37%   22,955,925    42.14%
Time deposits   17,012,101    36.79%   19,401,674    37.33%   21,692,273    39.82%
Other   498,450    1.08%   733,900    1.41%   688,501    1.26%
Total deposits   46,237,745         51,967,757         54,475,937      

 

At the end of 2Q12, Bancolombia had outstanding bonds for USD 2,540 million in international markets and for COP 5,707 billion in local markets. The maturities of these bonds range from 2 to 10 years.

 

1.6.Shareholders’ Equity and Regulatory Capital

 

Shareholders’ equity at the end of 2Q12 was COP 10,717 billion, increasing 34% or COP 2,709 billion with respect to the COP 8,008 billion reported at the end of 2Q11.

 

Bancolombia’s capital adequacy ratio was 14.89%, 63 basis points below the 15.52% for 1Q12 and 120 bps above the 13.69% at the end of 2Q11. This annual increase in the capital adequacy ratio is explained by the COP 1,680 billion stock issuance in February 2012.

 

Bancolombia’s capital adequacy ratio was 589 basis points above the minimum level required by Colombia’s regulator, while the basic capital ratio (tier 1), was 11.59% and the tangible capital ratio, defined as shareholders’ equity minus goodwill and intangible assets divided by tangible assets, was 10.92% at the end of 2Q12.

 

5
 

 

  2Q12

 

TECHNICAL CAPITAL RISK WEIGHTED ASSETS             
Consolidated (COP millions)  2Q11   %   1Q12   %   2Q12   % 
Basic capital (Tier I)   6,717,062    9.95%   9,045,808    12.00%   9,109,292    11.59%
Additional capital (Tier II)   2,526,745    3.74%   2,653,063    3.52%   2,593,604    3.30%
Technical capital (1)   9,243,807         11,698,871         11,702,896      
Risk weighted assets included market risk   67,511,195         75,397,039         78,589,868      
CAPITAL ADEQUACY (2)   13.69%        15.52%        14.89%     

(1) Technical capital is the sum of basic and additional capital.

(2) Capital adequacy is technical capital divided by risk weighted assets.

 

6
 

 

  2Q12

 

2.INCOME STATEMENT

 

Net income totaled COP 354 billion in 2Q12, or COP 416 per share - USD 0.93 per ADR, which represents a decrease of 20% compared to 1Q12 and a decrease of 8% compared to 2Q11. Bancolombia’s annualized ROE was 13.4% for 2Q12, lower than the annualized ROE of 18.1% reported for 1Q12 and the 19.6% of 2Q11.

 

2.1.Net Interest Income

 

Net interest income totaled COP 1,166 billion in 2Q12, 3.1% higher than that reported in 1Q12, and 18.6% higher than the figure for 2Q11. The increase of net interest income is explained by the improvement of the margin as well as the loan increases from previous quarters.

 

During 2Q12, income generated by the investment portfolio totaled COP 175 billion, a figure 1.9% higher than the COP 172 billion for 1Q12 and 8.6% lower than the COP 192 billion for 2Q11.

 

Net Interest Margin

 

Annualized net interest margin ended 2Q12 at 6.2%. Annualized net interest margin for investments remained stable at 4.3%, and annualized net interest margin for loans, financial leases and overnight funds increased to 6.5%. The increases in the Central Bank rate have allowed a faster pace of growth of returns from loans than the growth of funding cost.

 

Annualized Interest                                
Margin  3Q10   4Q10   1Q11   2Q11   3Q11   4Q11   1Q12   2Q12 
Loans´Interest margin   6.7%   6.6%   6.4%   6.3%   6.3%   6.3%   6.4%   6.5%
Debt investments´margin   3.6%   2.3%   3.0%   5.1%   4.3%   1.4%   4.3%   4.3%
Net interest margin   6.2%   6.0%   5.9%   6.2%   6.0%   5.6%   6.2%   6.2%

 

 

The funding cost increased during 2Q12 as deposits continued reflecting the increase in interest rates by the Colombian Central Bank. The annualized weighted average cost of deposits reached 3.3% in 2Q12, higher than the 3.0% for 1Q12 and the 2.5% for 2Q11.

 

Deposits' weighted            
average cost  2Q11   1Q12   2Q12 
Checking accounts   0.37%   0.24%   0.25%
Time deposits   3.94%   4.86%   5.09%
Saving accounts   2.26%   2.85%   2.97%
Total deposits   2.46%   3.04%   3.28%

 

2.2.Fees and Income from Services

 

During 2Q12, net fees and income from services totaled COP 441 billion, increasing 4.1% compared to those reported in 1Q12 and 8.3% higher than those reported in 2Q11. Fees from credit and debit cards increased 9.1% with respect to 1Q12 due to a higher transactional volume, and also increased 15.0% with respect to 2Q11. Fees from banking services increased 1.8% compared to 1Q12 and 8.9% with respect to 2Q11. Fees from brokerage services decreased 16.2% in 2Q12, which is basically explained by the fact that some revenues generated by the distribution of stock issuances occurred in Colombia in 1Q12, weren´t presented again in 2Q12, however these type of fees increased 56.9% when compared to 2Q11, which is in line with the higher transactional volumes.

 

7
 

 

  2Q12

 

The following table summarizes Bancolombia’s participation in the credit card business in Colombia:

 

ACCUMULATED CREDIT CARD BILLING          %   2012 
(COP millions)  Jun-11   Jun-12   Growth   Market Share 
Bancolombia VISA   1,058,808    1,199,705    13.31%   7.67%
Bancolombia Mastercard   1,269,139    1,425,478    12.32%   9.12%
Bancolombia American Express   1,372,601    1,779,101    29.62%   11.38%
Total Bancolombia   3,700,548    4,404,285    19.02%   28.16%
Colombian Credit Card Market   13,080,516    15,637,921    19.55%     
Source: Credibanco y Redeban multicolor                    
                     
CREDIT CARD MARKET SHARE          %   2012 
(Outstanding credit cards)  Jun-11   Jun-12   Growth   Market Share 
Bancolombia VISA   354,239    399,104    12.67%   5.88%
Bancolombia Mastercard   374,308    406,728    8.66%   5.99%
Bancolombia American Express   513,421    608,038    18.43%   8.96%
Total Bancolombia   1,241,968    1,413,870    13.84%   20.84%
Colombian Credit Card Market   5,977,538    6,785,872    13.52%     
Source: Credibanco y Redeban multicolor                    

 

2.3.Other Operating Income

 

Total other operating income was COP 190 billion in 2Q12, 4.4% lower than that in 1Q12, and 56.4% higher than in 2Q11. Income from foreign exchange gains and derivatives denominated in foreign currencies increased 76.6% in the quarter, due to the net effect of the active and passive positions the bank had in foreign currency.

 

The “Dividend income” line presents a decrease, as in 1Q12 the bank received some dividends that are not received in the other quarters of the year.

 

Revenues aggregated in the communication, rent and others totaled COP 78 billion in 2Q12, which is 9.7% higher as compared to 1Q12 and 48.0% higher as compared to 2Q11. This line includes revenues from commercial discounts and operating leases payments, which have grown as the value of assets rented under operating leasing contracts, have increased.

 

At the end of 2Q12, Bancolombia was still pending on the approval for the sale of Asesuisa. The "Insurance income" line continued recording the corresponding revenues related to Asesuisa, and will keep doing it until the sale is completed.

 

2.4.Asset Quality, Provision Charges and Balance Sheet Strength

 

The deterioration of the loan portfolio (new past due loans including charge-offs) was COP 383 billion in 2Q12. The vintages of consumer loans originated in 2010 and 2011 have some deterioration, which however, does not represent a threat to the balance sheet´s strength, since the provisions performed in 2010 and 2011 cover the potential deterioration. The largest part of the loan portfolio deterioration in 2Q12 occurred in the consumer loans and SMEs loans segments. This deterioration had been previously calculated and is the result of the growth strategy implemented by the bank since the beginnings of 2010.

 

8
 

 

  2Q12

 

Past due loans (those that are overdue for more than 30 days) totaled COP 1,858 billion at the end of 2Q12, which represents 3.0% of total gross loans. The PDL ratio increased from the 2.7% in 1Q12 and also from 2.6% reported in 2Q11. Loan charge-offs totaled COP 166 billion in 2Q12.

 

Provision charges (net of recoveries) totaled COP 310 billion in 2Q12. The largest provision charges during the quarter are explained by the provisions associated to the loans that have deteriorated in 2012.

 

Bancolombia maintains a strong balance sheet supported on an adequate level of loan loss reserves. Allowances for loan losses totaled COP 3,037 billion, or 4.9% of total loans at the end of 2Q12, increasing with respect to the 4.7% presented at the end of 1Q12, and with respect to the 4.8% at the end of 2Q11. Additionally, the coverage measured by the ratio of allowances for loans losses (principal) to PDLs (overdue 30 days), was 163% at the end of 2Q12. Likewise, the coverage measured by the ratio of allowances for loans losses to loans classified as C, D and E, was 119% at the end of 2Q12, decreasing with respect to the 123% in 1Q12 and increasing with respect to the 116% in 2Q11.

 

The following tables present key metrics related to asset quality:

 

ASSET QUALITY  As of   Growth 
(COP millions)  Jun-11   Mar-12   Jun-12   2Q12/1Q12   2Q12/2Q11 
Total performing past due loans (1)   512,210    648,827    685,728    5.69%   33.88%
Total non-performing past due loans   847,988    992,504    1,172,633    18.15%   38.28%
Total past due loans   1,360,198    1,641,331    1,858,361    13.22%   36.62%
Allowance for loans interest losses   2,539,101    2,880,179    3,036,907    5.44%   19.61%
Past due loans to total loans   2.55%   2.70%   2.99%          
Non-performing loans as a percentage of total loans   1.59%   1.63%   1.88%          
“C”, “D” and “E” loans as a percentage of total loans   4.12%   3.84%   4.10%          
Allowances to past due loans (2)   186.67%   175.48%   163.42%          
Allowance for loan losses as a percentage of “C”, “D” and “E” loans (2)   115.67%   123.26%   118.99%          
Allowance for loan losses as a percentage of non-performing loans (2)   299.43%   290.19%   258.98%          
Allowance for loan losses as a percentage of total loans   4.77%   4.74%   4.88%          
Percentage of performing loans to total loans   98.41%   98.37%   98.12%          

 

(1)       "Performing" past due loans are loans upon which Bancolombia continues to recognize income although interest in respect of such loans has not been received. Mortgage loans cease to accumulate interest on the statement of operations when they are more than 60 days past due. For all other loans and financial leasing operations of any type, interest is no longer accumulated after they are more than 30 days past due.

 

(2)        Under Colombian Bank regulations, a loan is past due when it is at least 31 days past the actual due date. 

 

9
 

 

  2Q12

 

PDL Per Category (30 days)                
   % Of total loan portfolio   2Q11   1Q12   2Q12 
Commercial loans   59.93%   1.71%   1.72%   1.85%
Consumer loans   19.00%   3.27%   4.02%   5.09%
Microcredit   0.52%   9.16%   10.17%   8.87%
Mortgage loans   8.15%   7.16%   7.08%   7.46%
Finance lease   12.41%   2.61%   2.33%   2.06%
PDL TOTAL   100.00%   2.55%   2.70%   2.99%
                 
PDL Per Category (90 days)                
   % Of total loan portfolio   2Q11   1Q12   2Q12 
Commercial loans   59.93%   1.25%   1.07%   1.16%
Consumer loans   19.00%   1.49%   1.68%   2.01%
Microcredit   0.52%   5.39%   6.20%   5.34%
Mortgage loans   8.15%   3.39%   2.93%   3.02%
Finance lease   12.41%   1.26%   1.09%   1.35%
TOTAL LOAN PORTFOLIO   100.00%   1.48%   1.36%   1.52%

 

LOANS AND FINANCIAL LEASES CLASSIFICATION  Jun-11   Mar-12   Jun-12 
(COP millions)                    
¨A¨ Normal   49,789,864    93.5%   56,345,912    92.7%   57,436,865    92.3%
¨B¨ Subnormal   1,263,852    2.4%   2,093,981    3.4%   2,260,310    3.6%
¨C¨ Deficient   772,764    1.5%   936,521    1.5%   1,014,117    1.6%
¨D¨ Doubtful recovery   892,671    1.7%   799,171    1.3%   886,303    1.4%
¨E¨ Unrecoverable   529,678    1.0%   601,024    1.0%   651,878    1.0%
Total   53,248,829    100%   60,776,609    100%   62,249,473    100%
                               
Loans and financial leases classified as C, D and E as a percentage of total loans and financial leases   4.12%        3.84%        4.10%     

 

2.5.Operating Expenses

 

During 2Q12, operating expenses totaled COP 1,025 billion, increasing 7% with respect to 1Q12 and also increasing 15% compared to 2Q11.

 

Personnel expenses totaled COP 429 billion in 2Q12, increasing 9% as compared to 1Q12 and 22% as compared to 2Q11. This total is the sum of: salaries (COP 343 billion), which decreased 1.0% for the quarter and increased 9.8% compared to 2Q11; of bonus plan payments (COP 73 billion), which increased 79.8% for the quarter and 116.6% compared to 2Q11; and lay-offs compensation (COP 13 billion) which increased 185.7% for the quarter and 132.1% compared to 2Q11. The increase in the line of bonus plan payments is mainly highlighted, as in 2Q12 there were bonuses paid out, since in 2011 the ROE generated by the bank was above the cost of capital. Likewise, the increase of salaries in the last 12 months is explained by the bank´s higher number of employees and the 2012 wage increases.

 

During 2Q12, administrative and other expenses totaled COP 494 billion, increasing 4.2% compared to 1Q12 and 9.7% compared to 2Q11. This variation during the quarter is mainly explained by higher rent expenses, higher taxes (other than income tax) and higher expenses for maintenance of fixed assets.

 

Depreciation expenses totaled COP 77 billion in 2Q12, increasing 10.4% as compared to 1Q12 and 48.0% compared to 2Q11. The increase in this type of expense is in line with the increase of operating leases from Leasing Bancolombia.

 

At the end of 2Q12, Bancolombia had 24,908 employees, 969 branches and 3,546 ATMs.

 

10
 

 

  2Q12

 

3.BANCOLOMBIA Company Description (NYSE: CIB)

 

Bancolombia is a full service financial institution incorporated in Colombia that offers a wide range of banking products and services to a diversified individual and corporate customer base of more than 7 million customers. Bancolombia delivers its products and services via its regional network comprised of Colombia’s largest non-government owned banking network, El Salvador’s leading financial conglomerate (Banagricola S.A.), off-shore banking subsidiaries in Panama, Cayman and Puerto Rico, as well as an agency in Miami. Together, Bancolombia and its subsidiaries provide stock brokerage, investment banking, leasing, factoring, consumer finance, fiduciary and trust services, asset management, and insurance, among others.

 

Contact Information

 

Bancolombia’s Investor Relations

Phone: (574) 4041837 / (574) 4041838

E-mail: investorrelations@bancolombia.com.co

Alejandro Mejia (IR Manager) / David Olano (Analyst)

Website: http://www.grupobancolombia.com/investorrelations/

 

11
 

 

  2Q12

 

BALANCE SHEET                        
(COP million)  Jun-11   Mar-12   Jun-12   Last
Quarter		   Annual   % of
Assets		   % of
Liabilities		 
ASSETS                                   
Cash and due from banks   5,068,394    6,552,446    5,998,131    -8.46%   18.34%   6.88%     
Overnight funds sold   690,974    1,420,166    1,376,514    -3.07%   99.21%   1.58%     
Total cash and equivalents   5,759,368    7,972,612    7,374,645    -7.50%   28.05%   8.46%     
Debt securities   9,664,733    7,881,941    9,419,617    19.51%   -2.54%   10.80%     
Trading   4,288,308    2,452,717    3,892,496    58.70%   -9.23%   4.46%     
Available for Sale   1,822,591    1,673,586    1,661,507    -0.72%   -8.84%   1.91%     
Held to Maturity   3,553,834    3,755,638    3,865,614    2.93%   8.77%   4.43%     
Equity securities   631,411    865,667    1,124,168    29.86%   78.04%   1.29%     
Trading   282,865    327,741    321,409    -1.93%   13.63%   0.37%     
Available for Sale   348,546    537,926    802,759    49.23%   130.32%   0.92%     
Market value allowance   -64,901    -75,004    -74,845    -0.21%   15.32%   -0.09%     
Net investment securities   10,231,243    8,672,604    10,468,940    20.71%   2.32%   12.00%     
Commercial loans   33,166,893    36,861,141    37,304,275    1.20%   12.47%   42.77%     
Consumer loans   9,356,075    11,261,552    11,829,203    5.04%   26.43%   13.56%     
Microcredit   267,064    317,485    321,382    1.23%   20.34%   0.37%     
Mortgage loans   4,143,587    4,962,698    5,072,371    2.21%   22.41%   5.82%     
Finance lease   6,315,210    7,373,733    7,722,242    4.73%   22.28%   8.85%     
Allowance for loan losses   -2,539,101    -2,880,179    -3,036,907    5.44%   19.61%   -3.48%     
Net total loans and financial leases   50,709,728    57,896,430    59,212,566    2.27%   16.77%   67.89%     
Accrued interest receivable on loans   405,441    531,956    526,661    -1.00%   29.90%   0.60%     
Allowance for accrued interest losses   -40,925    -47,400    -51,823    9.33%   26.63%   -0.06%     
Net total interest accrued   364,516    484,556    474,838    -2.01%   30.27%   0.54%     
Customers' acceptances and derivatives   1,046,411    815,693    796,502    -2.35%   -23.88%   0.91%     
Net accounts receivable   761,779    1,122,353    1,135,844    1.20%   49.10%   1.30%     
Net premises and equipment   1,444,712    1,644,538    1,455,856    -11.47%   0.77%   1.67%     
Foreclosed assets, net   56,450    55,874    63,829    14.24%   13.07%   0.07%     
Prepaid expenses and deferred charges   784,297    797,656    740,611    -7.15%   -5.57%   0.85%     
Goodwill   672,169    615,686    601,935    -2.23%   -10.45%   0.69%     
Operating leases, net   1,119,393    1,552,251    1,771,363    14.12%   58.24%   2.03%     
Other   1,443,053    1,792,123    2,284,468    27.47%   58.31%   2.62%     
Reappraisal of assets   763,793    814,398    833,676    2.37%   9.15%   0.96%     
Total assets   75,156,912    84,236,774    87,215,073    3.54%   16.04%   100.00%     
LIABILITIES AND SHAREHOLDERS' EQUITY                                   
LIABILITIES                                   
DEPOSITS                                   
Non-interest bearing   6,972,139    7,653,768    7,545,059    -1.42%   8.22%   8.65%   9.86%
Checking accounts   6,473,689    6,919,868    6,856,558    -0.91%   5.91%   7.86%   8.96%
Other   498,450    733,900    688,501    -6.19%   38.13%   0.79%   0.90%
Interest bearing   39,265,606    44,313,989    46,930,878    5.91%   19.52%   53.81%   61.35%
Checking accounts   2,769,260    2,373,830    2,282,680    -3.84%   -17.57%   2.62%   2.98%
Time deposits   17,012,101    19,401,674    21,692,273    11.81%   27.51%   24.87%   28.36%
Savings deposits   19,484,245    22,538,485    22,955,925    1.85%   17.82%   26.32%   30.01%
Total deposits   46,237,745    51,967,757    54,475,937    4.83%   17.82%   62.46%   71.21%
Overnight funds   2,444,591    855,725    2,050,665    139.64%   -16.11%   2.35%   2.68%
Bank acceptances outstanding   840,863    551,720    549,681    -0.37%   -34.63%   0.63%   0.72%
Interbank borrowings   2,843,177    3,014,022    1,771,380    -41.23%   -37.70%   2.03%   2.32%
Borrowings from domestic development banks   2,716,078    3,058,511    2,985,182    -2.40%   9.91%   3.42%   3.90%
Accounts payable   1,920,536    2,568,827    2,385,816    -7.12%   24.23%   2.74%   3.12%
Accrued interest payable   319,721    402,116    409,637    1.87%   28.12%   0.47%   0.54%
Other liabilities   570,210    792,124    756,651    -4.48%   32.70%   0.87%   0.99%
Bonds   8,387,065    9,789,091    10,239,977    4.61%   22.09%   11.74%   13.39%
Accrued expenses   807,135    740,623    791,697    6.90%   -1.91%   0.91%   1.03%
Minority interest in consolidated subsidiaries   62,190    64,590    81,907    26.81%   31.70%   0.09%   0.11%
Total liabilities   67,149,311    73,805,106    76,498,530    3.65%   13.92%   87.71%   100.00%
SHAREHOLDERS' EQUITY                                   
Subscribed and paid in capital   393,914    425,914    415,794    -2.38%   5.55%   0.48%     
Retained earnings   6,613,749    9,004,852    9,349,195    3.82%   41.36%   10.72%     
Appropiated   5,878,139    8,559,282    8,549,127    -0.12%   45.44%   9.80%     
Unappropiated   735,610    445,570    800,068    79.56%   8.76%   0.92%     
Reappraisal and others   989,760    983,838    936,134    -4.85%   -5.42%   1.07%     
Gross unrealized gain or loss on debt securities   10,178    17,064    15,420    -9.63%   51.50%   0.02%     
Total shareholder's equity   8,007,601    10,431,668    10,716,543    2.73%   33.83%   12.29%     

 

12
 

 

  2Q12

 

INCOME STATEMENT  As of   Growth               Growth 
(COP million)  Jun-11   Jun-12   Jun-12/Jun-11   2Q11   1Q12   2Q12   2Q12/1Q12   2Q12/2Q11 
Interest income and expenses                                        
Interest on loans   2,120,244    2,886,262    36.13%   1,100,638    1,412,218    1,474,044    4.38%   33.93%
Interest on investment securities   324,603    347,713    7.12%   191,992    172,263    175,450    1.85%   -8.62%
Overnight funds   9,128    14,910    63.34%   4,226    5,978    8,932    49.41%   111.36%
Leasing   295,750    399,688    35.14%   151,264    194,877    204,811    5.10%   35.40%
Total interest income   2,749,725    3,648,573    32.69%   1,448,120    1,785,336    1,863,237    4.36%   28.67%
Interest expense                                        
Checking accounts   17,723    12,538    -29.26%   9,045    6,441    6,097    -5.34%   -32.59%
Time deposits   309,482    488,271    57.77%   163,180    227,012    261,259    15.09%   60.10%
Savings deposits   200,750    332,066    65.41%   110,477    162,981    169,085    3.75%   53.05%
Total interest on deposits   527,955    832,875    57.75%   282,702    396,434    436,441    10.09%   54.38%
Interbank borrowings   15,544    30,252    94.62%   8,607    17,573    12,679    -27.85%   47.31%
Borrowings from domestic development banks   69,249    106,096    53.21%   36,685    54,125    51,971    -3.98%   41.67%
Overnight funds   39,118    34,681    -11.34%   21,010    16,245    18,436    13.49%   -12.25%
Bonds   220,319    346,395    57.22%   115,467    169,150    177,245    4.79%   53.50%
Total interest expense   872,185    1,350,299    54.82%   464,471    653,527    696,772    6.62%   50.01%
Net interest income   1,877,540    2,298,274    22.41%   983,649    1,131,809    1,166,465    3.06%   18.59%
Provision for loan and accrued interest losses, net   (313,485)   (579,922)   84.99%   (176,744)   (229,485)   (350,437)   52.71%   98.27%
Recovery of charged-off loans   116,613    79,686    -31.67%   61,040    41,662    38,024    -8.73%   -37.71%
Provision for foreclosed assets and other assets   (43,076)   (46,433)   7.79%   (25,428)   (31,153)   (15,280)   -50.95%   -39.91%
Recovery of provisions for foreclosed assets and other assets   56,316    38,293    -32.00%   37,192    20,821    17,472    -16.08%   -53.02%
Total net provisions   (183,632)   (508,376)   176.84%   (103,940)   (198,155)   (310,221)   56.55%   198.46%
Net interest income after provision for loans  and accrued interest losses   1,693,908    1,789,898    5.67%   879,709    933,654    856,244    -8.29%   -2.67%
Commissions from banking services and other services   182,759    207,853    13.73%   96,285    103,004    104,849    1.79%   8.89%
Electronic services and ATM fees   30,633    35,675    16.46%   17,553    17,410    18,265    4.91%   4.06%
Branch network services   59,549    60,836    2.16%   30,657    30,093    30,743    2.16%   0.28%
Payment fees   108,800    120,546    10.80%   55,601    59,519    61,027    2.53%   9.76%
Credit card merchant fees   8,637    3,712    -57.02%   5,870    1,293    2,419    87.08%   -58.79%
Credit and debit card annual fees   297,099    329,146    10.79%   149,332    157,411    171,735    9.10%   15.00%
Checking fees   36,421    36,824    1.11%   18,452    18,524    18,300    -1.21%   -0.82%
Fiduciary activities   94,608    100,129    5.84%   48,429    51,020    49,109    -3.75%   1.40%
Brokerage fees   20,363    32,556    59.88%   9,462    17,708    14,848    -16.15%   56.92%
Check remittance   9,075    10,947    20.63%   4,631    5,406    5,541    2.50%   19.65%
International operations   34,668    30,135    -13.08%   17,939    15,122    15,013    -0.72%   -16.31%
Fees and other service income   882,612    968,359    9.72%   454,211    476,510    491,849    3.22%   8.29%
Fees and other service expenses   (90,213)   (104,897)   16.28%   (46,913)   (53,546)   (51,351)   -4.10%   9.46%
Total fees and income from services, net   792,399    863,462    8.97%   407,298    422,964    440,498    4.15%   8.15%
Other operating income                                        
Net foreign exchange gains   8,908    43,693    390.49%   (12,200)   (15,793)   59,486    476.66%   587.59%
Derivatives Financial Contracts   30,967    38,077    22.96%   31,081    45,358    (7,281)   -116.05%   -123.43%
Gains(loss) on sales of investments on equity securities   (1,288)   1,345    204.43%   (848)   (289)   1,634    665.40%   292.69%
Securitization income   20,641    27,940    35.36%   11,790    13,235    14,705    11.11%   24.72%
Dividend income   23,399    42,787    82.86%   15,352    40,681    2,106    -94.82%   -86.28%
Revenues from commercial subsidiaries   48,354    65,777    36.03%   23,354    32,100    33,677    4.91%   44.20%
Insurance income   -    19,290    na    -    12,018    7,272    -39.49%   na 
Communication, postage, rent and others   101,807    149,352    46.70%   52,792    71,237    78,115    9.66%   47.97%
Total other operating income   232,788    388,261    66.79%   121,321    198,547    189,714    -4.45%   56.37%
Total income   2,719,095    3,041,621    11.86%   1,408,328    1,555,165    1,486,456    -4.42%   5.55%
Operating expenses   -    -         -    -    -           
Salaries and employee benefits   618,335    690,392    11.65%   312,905    346,913    343,479    -0.99%   9.77%
Bonus plan payments   64,791    113,013    74.43%   33,533    40,395    72,618    79.77%   116.56%
Compensation   14,417    17,323    20.16%   5,529    4,491    12,832    185.73%   132.09%
Administrative and other expenses   875,353    967,728    10.55%   450,047    473,829    493,899    4.24%   9.74%
Deposit insurance net   43,332    50,591    16.75%   22,342    26,140    24,451    -6.46%   9.44%
Donation expenses   13,609    1,463    -89.25%   12,197    780    683    -12.44%   -94.40%
Depreciation   102,152    147,230    44.13%   52,187    69,979    77,251    10.39%   48.03%
Total operating expenses   1,731,989    1,987,740    14.77%   888,740    962,527    1,025,213    6.51%   15.36%
Net operating income   987,106    1,053,881    6.76%   519,588    592,638    461,243    -22.17%   -11.23%
Goodwill amortization (1)   24,504    23,037    -5.99%   11,747    11,819    11,218    -5.09%   -4.50%
Non-operating income (expense)                                        
Other income   88,900    77,219    -13.14%   49,082    36,954    40,265    8.96%   -17.96%
Minority interest   (5,136)   (3,924)   -23.60%   (2,026)   (1,004)   (2,920)   190.84%   44.13%
Other expense   (59,919)   (41,553)   -30.65%   (37,662)   (22,557)   (18,996)   -15.79%   -49.56%
Total non-operating income   23,845    31,742    33.12%   9,394    13,393    18,349    37.00%   95.33%
Income before income taxes   986,447    1,062,586    7.72%   517,235    594,212    468,374    -21.18%   -9.45%
Income tax expense   (250,837)   (262,518)   4.66%   (131,708)   (148,642)   (113,876)   -23.39%   -13.54%
Net income   735,610    800,068    8.76%   385,527    445,570    354,498    -20.44%   -8.05%

 

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